'Big' budget deficit ahead for Florida

Aug 5, 2008

Aaron Deslatte

The Orlando Sentinel


Florida's sagging economy will push state government back into the red this month and force Gov. Charlie Crist to either further cut spending or tap deeper into the state's reserves.

Florida's sales and real-estate tax revenues have continued to plummet this year, forcing Crist in June to order all state agencies to hold back 4 percent of the $25.7 billion operating budget for the fiscal year that began July 1.

In May, Florida lawmakers passed an overall bare-bones $66 billion spending plan based on expectations of a $594 million surplus. But by the end of June, tax collections had fallen more than $200 million below projections and are likely to continue to drop.

The amount of the budget deficit will be set Aug. 15, when state economists meet to revise their projections for how much less revenue from sales and real-estate taxes Florida can expect through next June.

"It's going to be big," predicted state economist Amy Baker, part of the economic team that prepares revenue projections for the governor and Legislature.

Recognizing that possibility, legislators earlier this year gave Crist authority to use half of the $700 million in the state's budget-stabilization fund to patch holes in the 2008-09 spending plan.

Once that money is depleted, Crist could then tap as much as $1 billion from the Lawton Chiles Endowment Fund, usually used to finance health-care programs, to bring the budget back into balance.

But lawmakers also could decide to cut spending, perhaps in a budget-cutting special session after the November election. Last year, the Legislature slashed $1.5 billion in two rounds of budget-cutting.

But this year's budget already contains unprecedented cuts; it's roughly $6 billion below the original 2007-08 spending total. Lawmakers slashed more than $300 million from the public-schools budget -- the first time in decades that K-12 spending has declined -- and hundreds of millions more from social services, health care and virtually every government operation.


Tapping reserves

Crist met with his budget director Monday to go over the revenue picture and said afterward he is prepared to exercise his authority to tap reserves.

"Revenues are falling," Crist said. "It all depends on what the numbers are in a couple weeks, so we'll have to wait and see."

The main culprits for the decline continue to be slower population growth, less construction, and depressed housing sales and home values. But rising unemployment and declining consumer spending also hurt, since the sales tax accounts for three of every four state tax dollars.

Last week, Florida Supreme Court Chief Justice Peggy Quince asked lawmakers to spare the judiciary from the 1 percent quarterly budget "withholdings" ordered by Crist, saying she would have to lay off 280 staff, equal to 10 percent of the entire judiciary's work force.

"These reductions . . . [will] place at risk the constitutional guarantee to our citizens that the courts will 'be open to every person for redress of any injury, and justice shall be administered without sale, denial or delay,' " Quince wrote.

The likelihood of further cuts prompted organizations such as Florida TaxWatch, AARP and others on Monday to demand that lawmakers "find fresh solutions to the state's darkening revenue picture and long-term challenges."

At a news conference in Tallahassee, the groups said they were launching a campaign called "Florida's People, Florida's Promise" to host town-hall forums -- including one Aug. 16 in Maitland -- to encourage legislative candidates to think outside the box.

Among the ideas the groups threw out: allowing video lottery terminals that could raise $194 million a year but have run aground in the Republican-controlled Legislature.


Fearful of cuts

Organizer David Bundy, president of the Winter Park-based Children's Home Society of Florida, said child-services agencies like his could weather the $18 million in cuts imposed by this year's budget on case-management and adoption services. But he fears any further across-the-board cutting.

"What we don't want to see from policymakers is 'I've got to hit a number, so everything is cut X percent,' " Bundy said. "There can be a lot of damage that way."




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